Mustn’t Allow the Carpet-Bombing to Fall Behind Schedule

(Editor’s Note:Proposition 16 would require a two-thirds vote before cities or counties could contract with an electricity provider other than the investor-owned utility that would otherwise serve that local area. San Francisco and Yolo County have both explored this option. Both are in the Pacific Gas & Electric service area.

Pacific Gas & Electric is the chief financial backer of Proposition 16, a constitutional amendment that would require a two-thirds vote of local voters before such a contract, known as a “community choice aggregation” could be entered into. The measure also makes it harder for publicly owned utilities such as the Sacramento Municipal Utilities District, to compete for such contracts. Under Proposition 16, public utilities are prevented from expanding into new territory unless there is both a two-thirds vote of its existing customers and those in the area it proposes to serve. SMUD was the entity Yolo considered contracting with to create its community choice aggregation.

According to Ballotpedia, as of March 26, PG&E has contributed $28.5 million to the campaign.

While investor-owned utilities such as PG&E can use shareholder money to finance such campaigns, publicly owned utilities can’t. Opponents, as of March 26, have raised $40,000.)

California’s municipal utilities are some of the finest energy service providers in the country. But creation of a new muni or expansion of an existing one poses certain problems.

If a local government municipalizes private facilities, the loss of load from the departing customers is borne by the remaining customers of the investor-owned utility — a rate increase.

A new governmental utility must offer better rates, service and delivery to justify the deal — which is an expensive one. And they can’t. That’s why there have been so few succecssful municipal takeovers during the last two decades.

While I’m voting for Prop. 16, it is a meat axe approach, but will stop the frivoulous takeover attempts that too often raise expectations of utility customers but can’t deliver.